SciClone Reports Anticipated Financial Results for the First Quarter 2013

SciClone Reports Anticipated Financial Results for the First Quarter 2013 
FOSTER CITY, CA -- (Marketwired) -- 05/16/13 --   SciClone
Pharmaceuticals, Inc. (NASDAQ: SCLN) today reported its expectations
regarding financial results for the quarter ended March 31, 2013.  
Friedhelm Blobel, Ph.D., SciClone Chief Executive Officer, commented:
"The accounting treatment for portions of our NovaMed promotion
services revenue that may impact the timing of revenue recognition
between quarters is under review. We are working with both our prior
and current independent registered public accounting firms on the
matter. To obtain a resolution on this matter we believe we will need
to consult with the SEC and we are unable to predict the timing of
when our 10-Q will be filed. Today, we are reporting preliminary
results assuming an accounting basis consistent with the Company's
financial statements for the 2012 year-end, as well as our
expectation of variances in the results for this quarter. The most
significant issue we are reviewing is whether a portion
(approximately 25%) of our promotion services revenue under our
Sanofi agreement should be recognized during each of the first three
quarters, or deferred until the fourth quarter of the same year.
Until this issue is resolved, we will not be able to finalize our
results and file our Form 10-Q for the quarter."  
Except as noted, all information in this report assumes an accounting
basis consistent with the Company's financial statements for the 2012
year-end. Overall revenues are expected to be $29.8 million, compared
to $41.1 million for the same period of the prior year, including a
$10.7 million or 36% decrease in sales of ZADAXIN(R). The Company
previously communicated that ZADAXIN revenues would be lower in the
first half of the year as it reduces its channel inventory levels. As
discussed previously, in 2012 during the third quarter and
particularly in September 2012, the Company estimates that there was
an increase of approximately $14 million in ZADAXIN channel inventory
levels, and the Company believes that sales to its customers,
importers and distributors exceeded the pace at which they were able
to sell ZADAXIN through to hospital pharmacies and other parties,
resulting in lower commercial sales by the Company to its importer in
the first quarter of 2013. ZADAXIN channel inventory levels decreased
by approximately $5 million in the fourth quarter of 2012, and
decreased by approximately $5 million in the first quarter of 2013
due to strong demand for ZADAXIN in the market and a decreased supply
to importers. The Company expects these levels to continue to improve
in the second quarter of 2013 to more typical levels for imported
drugs in China. In addition, the Company has made significant
organizational and management enhancements, including the hiring of
an experienced Chief Executive Officer for China Operations, designed
to improve its sales and marketing performance. 
"In the first quarter of this year, we continued to execute on our
sales and marketing strategies according to our 2013 business plan
and delivered results that are in line with our expectations for the
quarter and our ability to achieve our full-year financial guidance
by year-end," said Dr. Blobel. "We continued to make good progress in
reducing the ZADAXIN(R) channel inventory build-up, demand for
ZADAXIN continues to be strong and we continue to anticipate positive
momentum in the second half of this year. Importantly, hospitals
sales in the quarter were, based on the information available to us,
higher than the prior period a year ago. Our focus remains on
reestablishing our Company's growth trajectory, including expanding
sales of ZADAXIN in new markets and in new indications, as well as on
establishing profitability in our product promotion business." 
Continued Dr. Blobel: "With the just announced licensing agreement
with Zensun (Shanghai) Science & Technology for Neucardin(TM), a
novel, first-in-class treatment for chronic heart failure, we are
fulfilling a major corporate goal to expand our product portfolio
with a high quality, differentiated therapeutic with significant
commercial potential to help drive our long-term growth. We believe
that Neucardin has near-term commercial potential and can contribute
to our long-term growth. We look forward to working with our partner
Zensun to advance this promising product through the regulatory and
commercial process." 
Financial Results 
Assuming an accounting basis consistent with the Company's financial
statements for the 2012 year-end, SciClone's expectation for revenues
for the quarter ended March 31, 2013 is $29.8 million, a decrease of
27% compared to revenues for the same period of the prior year of
$41.1 million. For the first quarter of 2013, ZADAXIN reported
revenues are expected to be $19.0 million, compared to revenues for
the same period in the prior year of $29.7 million, a decrease of
36%. The Company previously communicated that ZADAXIN revenues would
be lower in the first half of the year as it reduces its channel
inventory levels. For the quarter ended March, 31, 2013 the Company
estimates that if it determined to change its accounting treatment
for promotion services revenue under its contracts with Sanofi,
recognition of between approximately $2 million and $2.5 million of
the $29.8 million in revenue would be deferred until the fourth
quarter. Revenue would then be recognized, provided that the Company
had met certain annual sales targets, which it has met in each of the
last two years.  
SciClone's net income for the first quarter of 2013 is expected to be
$3.9 million, compared to $9.7 million for the same period in the
prior year, or $0.07 per share on both a basic and diluted basis, for
the three months ended March 31, 2013, compared to $0.17 and $0.16
per share on a basic and diluted basis, respectively, for the same
period in the prior year, assuming an accounting basis consistent
with the Company's financial statements for the 2012 year-end. The
Company estimates that if it determined to change its accounting
treatment for the Sanofi contracts, net income would be between
approximately $2 million and $2.5 million lower for the first quarter
of 2013.  
At March 31, 2013, cash and cash equivalents, restricted cash and
investments totaled approximately $96.1 million, compared to $87.0
million at December 31, 2012. The increase in SciClone's cash balance
was primarily due to the cash generated by the Company's commercial
operations, partially offset by $2.5 million used in the quarter
ended March 31, 2013 for the repurchase of SciClone stock. 
SciClone will release full financial results, including non-GAAP
results and a reconciliation to GAAP, when it has determined the
appropriate accounting treatment for the Sanofi revenue. 
The Company intends to hold a conference call with stockholders when
the full financial results are announced.  
SciClone also announced today a licensing agreement with Zensun
Pharmaceuticals. The Company will incur certain expenses in
connection with that transaction. The Company anticipates that it
will revise guidance to reflect such anticipated expenses when it
issues its final results for the first quarter.  
On May 16, 2013, the Company received a written notice from the
NASDAQ Stock Market indicating that the Company is not in compliance
with NASDAQ listing rule 5250(c)(1) because the Form 10-Q was not
timely filed. The notice was issued in accordance with standard
NASDAQ procedures as a result of the delayed filing. Timely filing of
periodic reports is a requirement for continued listing under NASDAQ
rules. The Company expects to take all necessary steps to come into
compliance with those rules as soon as the Form 10-Q is filed. The
notice has no immediate effect on the listing of the Company's common
stock. 
About SciClone  
SciClone Pharmaceuticals is a revenue-generating, profitable,
specialty pharmaceutical company with a substantial commercial
business in China and a product portfolio of therapies for oncology,
infectious diseases and cardiovascular, urological, respiratory, and
central nervous system disorders. SciClone's ZADAXIN(R) (thymalfasin)
is approved in over 30 countries and may be used for the treatment of
hepatitis B (HBV), hepatitis C (HCV), and certain cancers, and as a
vaccine adjuvant, according to the local regulatory approvals.
Besides ZADAXIN, SciClone markets about 14 mostly partnered products
in China, including Depakine(R), the most widely prescribed
broad-spectrum anti-convulsant in China; Tritace(R), an ACE inhibitor
for the treatment of hypertension; Stilnox(R), a fast-acting hypnotic
for the short-term treatment of insomnia (marketed as Ambien(R) in
the US); and Aggrastat(R), a recently-launched interventional
cardiology product. SciClone is also pursuing the registration of
several other therapeutic products in China. SciClone is
headquartered in Foster City, California. For additional information,
please visit www.sciclone.com.  
Forward-Looking Statements  
This press release contains forward-looking statements regarding
expected financial results and expectations. Readers are urged to
consider statements that include the words "may," "will," "would,"
"could," "should," "might," "believes," "estimates," "projects,"
"potential," "expects," "plans," "anticipates," "intends,"
"continues," "forecast," "designed," "goal," "unaudited,"
"approximately" or the negative of those words or other comparable
words to be uncertain and forward-looking. These statements are
subject to risks and uncertainties that are difficult to predict and
actual outcomes may differ materially. These include risk and
uncertainties relating to: the process of finalizing results for the
quarter and uncertainties in the estimate of the changes in financial
results that could result during that process; the costs, expenses
and risks relating to a potential delisting if the company cannot
file its delayed Form 10-Q within a reasonable time frame; the
course, cost and outcome of regulatory matters, including further
pricing decisions by authorities in China; the on-going regulatory
investigations; the Company's ability to execute on its goals in
China and on its objectives for revenue in fiscal 2013; the
challenges presented by integrating an acquired business into
existing operations; the effect of management changes and turnover in
its China operations; the potential effect over the coming quarters
of increased channel inventory; the dependence on third-party
license, promotion or distribution agreements, including the need to
renew such agreements or end arrangements that the Company does not
believe are beneficial; operating an international business; the
clinical trial process, including the regulatory approval and the
process of initiating trials at, and enrolling patients at, clinical
sites; and the effect of changes in its practices and policies
related to the Company's compliance programs. SciClone cannot predict
the timing or outcome of the ongoing SEC and DOJ investigations, or
of the level of its efforts required to cooperate with those
investigations; however, the Company has incurred substantial
expenses in connection with the investigations and related litigation
and expects to incur substantial additional expense, and the
investigations could result in fines and further changes in its
internal control or other remediation measures that could adversely
affect its business. Please also refer to other risks and
uncertainties described in SciClone's filings with the SEC. All
forward-looking statements are based on information currently
available to SciClone and SciClone assumes no obligation to update
any such forward-looking statements.  
Ambien, Depakine, Stilnox and Tritace are registered trademarks of
Sanofi and/or its affiliates. 
Aggrastat is a registered trademark of Medicure International Inc. in
the United States, and Iroko Cardio LLC in numerous other countries. 
SciClone, SciClone Pharmaceuticals, the SciClone Pharmaceuticals
design, the SciClone logo and ZADAXIN are registered trademarks of
SciClone Pharmaceuticals, Inc. in the United States and numerous
other countries. 
Corporate Contacts 
Gary Titus 
Chief Financial Officer 
650.358.3456 
gtitus@sciclone.com  
Jane Green 
Investors/Media
650.358.1447
jgreen@sciclone.com